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In: Finance

Consider the following table:     Stock Fund Bond Fund Scenario Probability Rate of Return Rate of...

Consider the following table:

   

Stock Fund Bond Fund
Scenario Probability Rate of Return Rate of Return
Severe recession 0.05 −25% −10%
Mild recession 0.25 −5% 16%
Normal growth 0.40 10% 9%
Boom 0.30 15% −6%


a. Calculate the values of mean return and variance for the stock fund. (Do not round intermediate calculations. Round "Mean return" value to 1 decimal place and "Variance" to 2 decimal places.)  

Mean return %
Variance %-Squared


b. Calculate the value of the covariance between the stock and bond funds. (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)

Covariance       %-Squared

Solutions

Expert Solution

1.
6.000%

2.
109.00 %-Squared

3.
-30.30000 %-Squared

jeff jeffy answered 1 year ago
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